Tax revenue drops in state

As expected, the economic downturn is affecting the state’s revenue. Rhode Island tax receipts dropped about 17 percent for the first quarter of fiscal year 2009 – from $882 million last year to $735 million this year – according to a report released yesterday by the state Department of Revenue.

Though the state had lowered its expectations in light of the weak economy, the $735 million total came in $25.5 million below the legislators’ projected sum for the first quarter, which runs from July 1 to Sept. 30.

The State House Fiscal Advisory staff called the drop in tax revenue “cause for concern,” in a companion report it released Wednesday.

The decline comes at a time when the state is already struggling under a $33 million deficit from last year. The House report warned that the state’s deficit could grow to about $60 million by the end of the current fiscal year.

Rep. Steven Costantino, the Democratic chairman of the state’s House Finance Committee, said the declines in tax revenue were largely due to increased unemployment and lower incomes because of the struggling economy.

“Look at the income numbers,” Costantino told the Providence Journal on Wednesday. “This is definitely linked to the lack of jobs.”

Amy Kempe, a spokeswoman for Gov. Donald Carcieri ’65, told the Journal, “This is the first quarter, and the administration has been holding the line on personnel costs and spending.”

“Just as Rhode Islanders have been asked to tighten their belts,” she added, “so is the state.”